Japanese Yen Flat As Retail Sales, Foreign Bond Investment Fall

The Japanese yen is trading relatively flat on Thursday as investors try to cope with a diverse array of negative economic data that will add to fears of a recession. Falling retail sales and slumping foreign bond investment are dominating trading patterns, but analysts will keep an eye on upcoming jobs, housing, and industrial numbers.

October retail sales plummeted 14.4%, down from the 7.2% gain in September. The market did pencil in a 10% decline because of the 2% national sales tax hike that went into effect. Consumers went on a shopping spree prior to Tokyo raising the sales levy and then they stayed home once it was implemented. The government had postponed the hike twice, but after rising debt levels, growing deficits, and structural inadequacies, leaders had no other alternative but to increase the sales tax.
Studies have predicted that the hike will apply a burden of $2 billion on Japanese households.
In the week ending November 23, bond investments held by Japanese investors abroad fell by $1.42 billion, down from the $1.12 billion jump in the previous week. The Ministry of Finance also reported that Japanese stock investments by foreigners surged by $1.2 billion in that same week.
Earlier this week, two index readings were released. The Coincident Index for September came in at 101.1 and the Leading Economic Index for September clocked in at 91.9.
Markets will now look ahead to several important economic measurements, including industrial production, construction orders, and housing starts. The consensus is that they are all projected to contract. To kick off December, capital spending for the third quarter will be published and observers are eyeing a 2.8% increase. The final Jibun Bank Manufacturing Purchasing Managers’ Index (PMI) will complement the capex figures on Monday and traders are forecasting 48.6 for November.
The USD/JPY currency pair dipped 0.04% to 109.50, from an opening of 109.55, at 12:25 GMT on Thursday. The EUR/JPY edged up 0.03% to 120.52, from an opening of 120.48.

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